The Chasm Between Vcs And Content Companies Is About To Get Larger

History has a way of repeating itself -- except, of course, when it doesn’t.

Back in 2000, I saw firsthand how venture-backed TheMan crashed, burning through $17 million in capital,
while my company AskMen survived and thrived on only $500,000 in funding. Today, AskMen is a unit in FOX’s empire; TheMan is a footnote in dot-com history. AskMen survived because 1) most startups like TheMan saw the rug pulled from beneath them by their venture
backers, 2) traditional media companies didn’t see the need or urgency to launch online magazines to hedge against their print brands (let alone move those print brands online) and 3) AskMen had
a simple but effective content and marketing strategy of duplicating online what worked in print (go figure!).

During that 2000-2005 run, we lived through the tail end of the dot-com bubble,
the ensuing crash, the nuclear winter, the rise from the ashes and rebirth of the commercial Web, to the climatic pre-Web2.0 moment when AskMen sold to IGN, who in turn sold to News Corp.
AskMen grew organically and through attrition. That’s how so many successful companies end up thriving.

While money can accelerate a technology firm’s growth, it takes a
while for a content brand and company to gel. As the saying goes, nine women can’t give birth to a child in one month. VICE was practically dead in 2000 after launching in 1994, but
today it’s doing rather well. Ditto Machinima, which took off in 2006 after launching in the early 2000s.

Partly for that reason, investing in content wasn’t in vogue then,
nor it is necessarily now.

Early on, I sat and watched as both print and television media companies sat on the sidelines and didn’t fully embrace online video (just as
print media hadn’t earlier embraced online magazine).

But the 2008-09 economic meltdown forced companies to re-evaluate that apathy. Time Inc. is expecting major changes with an emphasis on video, while Conde Nast has made a firm commitment to unlock the value of its intellectual property and
brands via video. The head of Conde Nast Entertainment, Dawn Ostroff, has signaled that digital
is the future. That kind of talk was unheard of when I was at AskMen, and until the 2008-09 economic meltdown, it was probably verboten.

Considering that the print advertising
revenue that evaporated then simply hasn’t come back (and it likely never will), many are looking for digital opportunities, as did Time publisher Kim Kelleher, who accepted the president position at
Say Media (arguably one of the ad networks/technology companies trying hardest to reinvent itself as a content company).

But maybe history doesn’t always repeat
itself

In the 2003-04 stretch, when activity resumed, I saw a lot of strange bedfellows before media companies began buying up content sites (AOL, for example, bought a battalion of
ad networks then, but by the time Tim Armstrong joined, he bet the company on content).

In 2006-08, we saw the same thing before content came back in vogue today. Big media isn’t looking
at buying aggregators, link shorteners, location based services, daily deal sites, or whatever the latest fad amongst Silicon Valley is. They’re back shopping for premium content or
looking at ways to make their ultra- and super-premium content come to life online. For example, during the Olympics, NBC will now air everything live on TV and make more content available than ever on its website. The Olympics is a unique
quadrennial event, granted, but it’s pretty clear that despite all of the
buffers of theatrical, broadcast, cable companies, Hollywood will never be the
same.

A cynic may point out
that 9 out of 10 companies VCS touch turns to dust, with anemic overall results -- fair enough. While most VCs have avoided content bets
like the plague, a few realize that we’re in the golden era of digital media, and online content will fuel growth as the infrastructure and platform plays have come and gone. But
let’s face it: those that did invest in content failed to boast any meaningful success stories. Why? Maybe they’re trying to emulate technology too much, instead of
understanding what it takes to build a content brand?

Excellent discussion. It's my experience that tech VC's focus on a single technology, then dash in direction after direction hoping to find the fit that creates an exit strategy. Fundamentally, content requires a commitment to a brand strategy that evolves, but can't stand up to this frenetic dashing about that VC's love so much. (What's the most concerning moment in a VC backed company? When the EVP comes in and say "I was at the board meeting, and our VC just read a new book that says...". This is an indication that all is lost.) Content is a product that builds over time - not a one-shot technology by which you live or die.